White Paper on Industries in Andhra Pradesh during the period June 2014 – March 2019. released by Department of Industries & Commerce.
below is the excerpt from the 47 page white paper .. Download link to the white paper is provided at the end of the below excerpt.
2.Status of AP Reorganization Act 2014
The residual state of Andhra Pradesh was formed through the enactment of the AP Reorganization Act 2014. Although the Act provisioned for various interventions to promote industrialization in Andhra Pradesh, most of these have not been implemented, including giving special category status and revenue incentives.
2.1. Financial incentives for attracting Investments
Provision in the Act (Section 46 (2) (3) and Section 94 (1) & (2)
UNDER SECTION 46 (2)(3), Government of India shall, while considering the
special development package for the successor state of AP, provide adequate incentives, in particular for Rayalaseema& North Coastal regions
Under Section 94 (1) & (2)
(1) The Central Government shall take appropriate fiscal measures, including offer of tax incentives, to the successor States, to promote industrialisation and economic growth in both the States.
(2) The Central Government shall support the programmes for the development of backward areas in the successor States, including expansion of physical and social infrastructure.
Announcement made by the Hon’ble Prime Minister: The Hon’ble Prime Minister of India made an announcement in Rajya Sabha on 20th February 2014 that
Special status will be extended to the successor state of Andhra Pradesh
comprising 13 districts, for a period of five years. This will put the state’s finances on a firmer footing.
Bill already stipulates that the central government shall take appropriate fiscal measures, including offer of tax incentives to the successor states in order to promote industrialization and economic growth in both the states.
These incentives will be along the lines extended to some other states.
As provisioned in the “AP Reorganization Act 2014”, CBDT (Central Board of Direct Taxes) has notified seven districts for availing tax incentives under section 32(1)(iia) and section 32AD of the Income-tax Act. These districts are: Anantapur, Chittoor, Kadapa, Kurnool, Srikakulam, Vishakhapatnam and Vizianagaram.
Any manufacturing unit setup in the above districts during the period from 01.04.2015 to 31.03.2020 will benefit from
15% of higher additional depreciation
15% of investment allowance on the cost of plant and machinery
These incentives are not specifically given to Andhra Pradesh to meet the promises made in the AP Reorganization Act 2014. These incentives have also been extended for development of background areas across various states such as Telangana, West Bengal and Bihar, thereby providing no clear advantage to Andhra Pradesh to attract investors through additional incentives.
While denying special status to Andhra Pradesh, the Union Government approved the North East Industrial Development Scheme (NEIDS), 2017, which offers
GST-Reimbursement up to the extent of Central Govt. share of CGST and IGST for 5 Years.
Reimbursement of Centre’s share of income tax for first 5 years
30% of the investment in Plant & Machinery with an upper limit of Rs.5 Crore
3% on working capital credit advanced
Reimbursement of 100% insurance premium on insurance for 5 years
Transport and Employment subsidy etc.
The Andhra Pradesh Government was not able to get these concessions for the state. The endeavor of the present administration will be to make all efforts possible to persuade Government of India to grant Special Category Status to Andhra Pradesh and provide necessary fiscal and revenue incentives as provided for special category states.
1.2. Visakhapatnam – Chennai industrial corridor (VCIC)
Provisions in the Act (Schedule XIII)
The Government shall, within six months from the appointed day, examine the feasibility of establishing a Vizag-Chennai industrial corridor along the lines of Delhi-Mumbai Industrial Corridor and take within such period an expeditious decision thereon
The “AP Reorganization Act 2014” has clearly stated that the Government of India will examine feasibility and further support the development of Vizag-Chennai Industrial Corridor. Government of India had already supported the Delhi-Mumbai Industrial Corridor (DMIC) with grants as well.
However, the State Government, instead of pursuing this matter with the Government of India, had agreed to develop the VCIC with a loan of Rs 4,170 Crores from Asian Development Bank.Additionally, on its part, the State Government committed contribution ofRs 1,434 Cr (USD 215 million) for the development of the VCIC from its own budget. Subsequently works have also been taken up under VCIC. Considering the weak finances of the state, the loan from ADB and the additional budgetary support has put an additional burden on the state exchequer.
Government of Andhra Pradesh was not able to get the grant under NICDIT. The state government should have developed VCIC on the lines of DMIC, through 100% grant funding by National Industrial Corridor Development & Implementation Trust (NICDIT), rather than through a loan to be repaid by the State Government.
1.3. Greenfield petrochemical complex
Provisions in the Act (Schedule XIII) – Section 93 (4)
IOC or HPCL shall, within six months from the appointed day, examine the
feasibility of establishing a greenfield crude oil refinery and petrochemical
complex in the successor State of Andhra Pradesh, and take an expeditious
In line with the provision of the Act, Government of India was required to examine the feasibility to setup a Petchem complex in Andhra Pradesh. However, the Government of India suggested a viability gap funding to be provided by the State Government through an interest-free loan of Rs. 1,238 crores per annum, for 15 years from the zero-date, repayable over the next 15 years. The State Government failed to negotiate effectively with the Union Government to ground the project, without any VGF to be provided by the State Government. There is an urgent need to rework the project as it would have tremendous impact through large scale employment, and development of a large industrial ecosystem around the petrochemical complex
1.4. Integrated Steel plant in YSR Kadapa district
Provisions in the Act (Schedule XIII) – Section 93 (3)
SAIL shall, within six months of the appointed day, examine the feasibility of establishing an integrated steel plant in YSR district of the successor state of Andhra Pradesh
The district of YSR Kadapa is one of the most backward districts in the state. Hence it was imperative to drive Industrial growth in the Kadapa, and by extension the Rayalaseema region. The integrated steel plant provisioned in the AP Reorganisation Act, 2014, in YSR Kadapa district would have generated large scale employment for the youth of Kadapa. The infrastructure development would have tremendously boosted the
economy of the region. However, the State Government was unable to work effectively with the Central Government to ground this project. Further, the State Government laid foundation stone to implement the Steel plant project on its own, without a proper plan to raise funding for
… … … … … this is the excerpt from the white paper released by Andhra Pradesh State Government on 21st August 2019. The full white paper can be downloaded here.